Markets

“Sustainability… and the
Global Lubricants Industry”
Apu Gosalia
Head of Global Strategic Marketing & Chief Sustainability Officer
The 16th ICIS World Base Oils & Lubricants Conference
London, 23rd February 2012
Markets
2
FUCHS PETROLUB AG
Markets
Development Global Lubricants Market
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
36.4
35.6
35.7
35.4
36.1
36.5
36.9
37.1
36.0
32.2
34.5
35.1
-2.2
0.5
-0.8
1.9
1.0
1.2
0.5
-3.0
-10.6
7.0
1.9
Demand in mn t*:
Variance in %:
*without marine oils
3
FUCHS PETROLUB AG
Markets
Regional Development Global Lubricants Market
2011 : 2010
Variance (%)
North America
1.0
Latin America
3.3
Western Europe
4
FUCHS PETROLUB AG
-0.3
Central / Eastern Europe
1.4
Middle East
1.0
Africa
1.0
Asia-Pacific
3.0
World
1.9
Markets
Regional Breakdown Global Lubricants Market
Volume*
36.4
Latin
America
8%
35.1
Western
Europe
11%
(million tons)
27%
20%
Central /
Eastern
Europe
9%
28%
34%
52%
39%
North
America
20%
00
0
2
Asia-Pacific & Rest of World
Africa
5% Middle East
6%
2011
Asia-Pacific
41%
11
0
2
Americas
Europe
*without marine oils
5
FUCHS PETROLUB AG
6
FUCHS PETROLUB AG
C
en
t
ra
l
Eu
e
t
ro
p
Ea
s
ci
W
or
ld
a
fic
Af
ric
As
ia
-P
a
Am
er
ic
a
er
n
tin
as
t
La
/E
dl
e
e
a
ro
p
er
ic
Eu
Am
n
M
id
te
r
or
th
W
es
N
Markets
Regional Per-Capita Consumption 2011
kg
20
15
10
5
0
7
FUCHS PETROLUB AG
ia
n
n
da
U
an
a
Ir a
ia
ai
n
st
ra
l
Sp
Au
an
ly
rk
ey
iw
Tu
Ta
Ita
K
M
ex
ic
o
Fr
an
c
In
do e
ne
s
Th ia
ai
la
nd
C
a
Br
az
G
i
er l
m
an
y
Ko
re
a
us
si
In
d
Ja
pa
R
a
SA
hi
n
U
C
Markets
Ranking Top 20 Lubricant Countries 2011
6,000
K tons
5,000
4,000
3,000
2,000
1,000
0
Markets
Product Group Breakdown Global Lubricants Market
Process Oils
10%
Greases
3%
MWF/CP
5%
2011
Industrial Oils
26%
8
FUCHS PETROLUB AG
Automotive
Oils
56%
Manufacturers & Mergers
9
FUCHS PETROLUB AG
Manufacturers & Mergers
Structure Global Lubricants Industry
1,500
1,200
"Independents"
"Majors"
590
200
mid-90s
10
FUCHS PETROLUB AG
180
2000
130
2005
Manufacturers & Mergers
M&A Activity Lubricants Sector - Deals 2005
• FUCHS PETROLUB acquired OVOLINE LUBRICANTS
• TOTAL bought African lubricants business of EXXON MOBIL
20
• KKR Investment bought FL SELENIA
18
• ILLINOIS TOOL WORKS bought METAL MATES
16
14
12
10
8
6
4
2
0
2005
11
2006
FUCHS PETROLUB AG
2007
2008
2009
2010
2011
Manufacturers & Mergers
M&A Activity Lubricants Sector - Deals 2006
• JASON acquired Lippert-Unipol from FUCHS PETROLUB
• AXEL CHRISTIERNSSON acquired SHELL’s Christol Grease
20
• SHELL acquired 75% of BEIJING TONGYI in China
18
• CHEMTURA acquired HATCO & ANDEROL from Kaufman
16
14
12
10
8
6
4
2
0
2005
12
2006
FUCHS PETROLUB AG
2007
2008
2009
2010
2011
Manufacturers & Mergers
M&A Activity Lubricants Sector - Deals 2007
• FUCHS PETROLUB acquired IGUCIMA’s forging lube business
• FUCHS PETROLUB acquired TRIBOTECNICA’s greases
20
• CONDAT purchased HENKEL’s wire drawing lube business
18
• PETRONAS acquired FL SELENIA from KKR Investment
16
14
12
10
8
6
4
2
0
2005
13
2006
FUCHS PETROLUB AG
2007
2008
2009
2010
2011
Manufacturers & Mergers
M&A Activity Lubricants Sector - Deals 2008
• FUCHS PETROLUB acquired MS FLUID TECHNOLOGIES
• HOUGHTON acquired D.A. STUART
20
• MILLER INDUSTRIAL FLUIDS acquired CRESCENT OIL
18
• TOTAL Lubricants North America acquired LUBRICANTS USA
16
14
12
10
8
6
4
2
0
2005
14
2006
FUCHS PETROLUB AG
2007
2008
2009
2010
2011
Manufacturers & Mergers
M&A Activity Lubricants Sector - Deals 2009
• FUCHS PETROLUB acquired DYLON INDUSTRIES
• PRISTA OIL bought 92% of BOGDANY PETROL
20
• SHELL sold Greek downstream business to MOTOR OIL
18
• TOTAL Lubricants Canada acquired ULTRAMAR’s lube business
16
14
12
10
8
6
4
2
0
2005
15
2006
FUCHS PETROLUB AG
2007
2008
2009
2010
2011
Manufacturers & Mergers
M&A Activity Lubricants Sector - Deals 2010
• FUCHS acquired SHELL’s global food-grade lube business
• HOUGHTON acquires Shell’s metalworking oil business
20
• MILACRON acquired STARCHEM metalworking fluids business
18
• QUAKER acquires grease manufacturer SUMMIT LUBRICANTS
16
14
12
10
8
6
4
2
0
2005
16
2006
FUCHS PETROLUB AG
2007
2008
2009
2010
2011
Manufacturers & Mergers
M&A Activity Lubricants Sector - Deals 2011
• CEPSA buys CHEVRON’s Spanish lube business
• AXEL CHRISTIERNSSON acquires JESCO Resources
20
• QUAKER acquires G.W. Smith & Sons
18
• LUBRIZOL acquires CHEMTOOL
16
14
12
10
8
6
4
2
0
2005
17
2006
FUCHS PETROLUB AG
2007
2008
2009
2010
2011
18
FUCHS PETROLUB AG
IN
D
IA
N
TA
M
O
IL
A
AS
IN
O
N
NE
IL
O
IL
O
LI
PE
TR
PE
R
N
LU
KO
IP
PO
VA
LV
N
O
PE
HI
NA
L
N
C
EM
IT
SU
FU
C
HS
SI
N
O
C
ID
RO
BP
TO
TA
HE
V
PE
TR
C
SH
EL
L
EX
XO
N
ID
LU
KO
L
IL
TO
TA
ZO
N
PC
BP
RO
N
HE
V
C/
CN
PE
N
C
PC
R
EP
S
O
L
AG
IP
IL
EM
IT
SU
N
IP
PO
N
O
VA
IL
LV
O
LI
NE
FU
C
HS
IN
D
IA
N
O
IL
C
L
N
SH
EL
EX
XO
Manufacturers & Mergers
Ranking Top 15 Lubricants Manufacturers
2000
2011
Manufacturers & Mergers
Demergers & Spin-offs
Marathon Oil
(upstream)
Spin-off in 2 independent energy companies
MARATHON
Marathon Petroleum Corp.
(energy)
Exploration & Production
(upstream)
Separation in 2 stand-alone corporations
CONOCO PHILLIPS
Refining & Marketing
(downstream)
Refining & Chemicals
Creation of 2 new divisions
TOTAL
Supply & Marketing
19
FUCHS PETROLUB AG
Manufacturers & Mergers
Consolidations & Acquisitions
Refining
CHEVRON
Merger of 2 units
Petrochemicals
ExxonMobil
Fuels Marketing
Company
Consolidation of 2 businesses
ExxonMobil
Lubricants & Petroleum
Specialties Company
EXXON MOBIL Fuels,
Lubricants & Specialties
Marketing Company
TruSouth Oil
CALUMET
Hercules
20
FUCHS PETROLUB AG
Acquisition of 2 companies
Sustainability
21
FUCHS PETROLUB AG
Sustainability
Terminology
Origin:
Kursächsische Forstordnung, 1560
Hans Carl von Carlowitz, 1713
Hermann Friedrich von Göchhausen, 1732
Georg Ludwig Hartig, 1795
"Sustainability is the way of cultivation of a forest, in which only as much wood is removed,
so that the forest is never cut down entirely, and can regenerate itself again"
22
Root:
term derived from the Latin word sustinere (tenere = “to hold” / sus = “up”)
main meanings in dictionaries refer to “maintain", "support“ or "endure”
Definition:
“Sustainable development meets present needs without compromising the
ability of future generations to meet their needs“
FUCHS PETROLUB AG
Sustainability
Code of Responsible Conduct for Business
social
ecological
23
FUCHS PETROLUB AG
economic
Sustainability
Drivers
Internal Drivers
24
External Drivers
Mission Statement
Economy
Competitiveness
Stakeholders / Financial Market
Credibility
Customers
Employee Loyalty
Suppliers
Efficiency Enhancement
Society / Community
Capital Access
Politics / NGOs
Employer Branding
Media
Quality Improvement
Future Generations
FUCHS PETROLUB AG
Sustainability
Triple-Bottom-Line
Sustainability
Economic
Raw materials / Procurement /
Production / Inventory
25
FUCHS PETROLUB AG
Social
Ecological
Finished Products
Internal:
Employees
External:
Community
Sustainability
Approach
Source: Graduate School Rhein-Neckar
26
FUCHS PETROLUB AG
Outlook
27
FUCHS PETROLUB AG
Markets
Outlook
Global lubricant demand in 2011 was promising in the 1st half, but tightened in the 2nd
half, i.e. we had a moderate market increase in 2011 and will see a volatile year 2012
Regional lube market dynamics of the past ten years in terms of quantity and quality
will continue in the future
Changing raw material input split of base oils and additives as well as their qualities
will influence lubricants manufactured and consumed and vice-versa
Europe & Americas
Mature markets with growth in quality and emerging markets with growth in quantity
Asia-Pacific and Rest of World
Mature & Emerging / Quantity & Quality / Sustainability?
28
FUCHS PETROLUB AG
Manufacturers & Mergers
Outlook
M&A activity could increase, because …
-> after recession greater availability of investment capital available
M&A activity could increase, because …
-> deals on hold in recession move forward as economy improves
M&A activity could increase, because …
-> niche players who suffered in recession become attractive targets
M&A activity could increase, because …
-> smaller players have no resources to bear costs of REACH, etc.
M&A activity could increase, because …
-> of the recent demergers, spin-offs, separations of Majors
29
FUCHS PETROLUB AG
Sustainability
Outlook
“We do not inherit the earth from our
parents, we borrow it from our children”
Antoine de Saint Exupéry
30
FUCHS PETROLUB AG